Upstart’s Antitrust Suit Against PG&E Advanced

SAN FRANCISCO (CN) — After many attempts, a small California-based natural gas provider’s antitrust claims against Pacific Gas & Electric gained traction in Federal Court on Thursday. U.S. District Judge Richard Seeborg allowed United Energy Trading’s claims that PG&E is engaging anticompetitive behavior to move forward by denying the giant utility’s motion to dismiss on Thursday. United Energy is a third-party gas provider, known as a core transportation agent, which competes for customers throughout much of California, from Eureka to Bakersfield and the Pacific Ocean and the Sierra Nevada. United and other so-called core transportation agents purchase natural gas and then deliver it straight to the customer via PG&E’s infrastructure. Whereas PG&E purchases and stores its gas, the core transportation agents tell their customers they don’t have to pay for the overhead related to storage and transmission and can pass the savings on to the customer. Also, core transportation agents ride the market, so when the price of natural gas is depressed — as it is currently — customers stand to save, while PG&E, which buys and stores the commodity, is more locked in on its price points. The dispute between United Energy and PG&E relate to the billing process. Under a certain program, the core transportation agents’ and PG&E’s charges appear on a consolidated statement and the customer pays both sets of charges with a single check. In essence, this means PG&E acts as the collection agent for United and others. United in particular says that having PG&E serve as its agent is yet another spot where it can save on overhead and pass savings onto customers. However, United claims that PG&E is behaving fraudulently in its role as the collection agent by withholding money owed and is “misleading them into believing the customer is not paying.” In certain instances, PG&E will use these supposed nonpayments as a means to disconnect the customers from core transportation agent services, which means by default they are reconnected to PG&E. “These fraudulent schemes lack any legitimate business justification, in United Energy’s eyes, and allegedly are perpetrated against core transportation agents based not on competitive zeal, but anticompetitive malice,” Seeborg wrote in the ruling. The schemes are anticompetitive because they necessitate large expenditures on marketing in an attempt to retain customers, and the fact that they lose customers as quickly as they gain them means there is little to no opportunity for growth, according to United Energy. “United Energy further maintains the schemes have increased consumer prices, despite an ample supply of natural gas and decreasing wholesale prices,” Seeborg said in the ruling. United calculates that customers are paying 20 percent more for natural gas since 2014, despite a nearly 50 percent decline in the wholesale price. Essentially, Seeborg found United’s arguments persuasive enough to let the case move forward. “United Energy further maintains the schemes have increased consumer prices, despite an ample supply of natural gas and decreasing wholesale prices,” Seeborg wrote. Seeborg found that United adequately pleaded that PG&E’s failure to provide billing amounts to a barrier to enter the market, and that PG&E’s anticompetitive conduct creates a dangerous probability that it will attain monopoly power and “continue to charge supra-competitive prices.” PG&E did not return a phone call requesting comment.